Minews - Australia’s mining tax expected revenue continues to disappoint

(Minews) - Mining tax revenue in Australia continues to fall short of the government’s expectations, with only $232 million raised so far, as opposed to $4 billion originally forecast when the legislation was enacted in 2011.

An analysis by The Weekend Australian shows the much-debated Minerals Resource Rent Tax (MRRT) has failed to raise revenue, even though the profits of the three big iron ore miners — BHP Billiton, Rio Tinto and Fortescue— soared by 81% and the price of the commodity rose to more than US$130 a tonne.

The paper adds the three miners made a combined US$14.6 billion (A$16.1bn) in half-year profits, but only one of them —BHP— had the obligation to pay under the MRRT in the six months to December 31.

While the country’s government have not offered an explanation for why the tariff failed to raise revenue, analyst say it is likely because the original tax was modified by BHP, Rio, Glencore Xstrata and the Gillard Government to allow the inclusion of market values for mines.

“That allowed mining companies to claim depreciation from a valuation that includes the rent that is supposed to be taxed. Thus, it is neutralized,” says the Macro Business blog.

In an opinion piece for The Guardian, Luke Mansillo, suggests another interesting reason:

“We need to be reminded that 83% of Australian mining operations are foreign owned. The net income balance – the difference between the profits of Australian investing overseas, and profits made by foreign companies in Australia – has suffered as a result of mining companies extracting greater amounts of Australian mineral wealth for foreign owners.”

While the Minerals Council of Australia has defended the design of the tax, saying the industry already pays its fair share, the Abbott Government wants to get rid of the tax, and is expected to do so when the new Senate comes into term after July 1.